Self-Help For Condo Boards In A Jam

Owners, board members and managers all have obligations to their community associations. When the parties don\’t do what they should, the association is vulnerable to loss and liability.

Then what?

Legal action is an option, but not the only one. Many difficult situations can be resolved before they get that far or prevented in the first place.

Three industry veterans offered these self-help strategies to encourage association partners to do their share:

Owners who don\’t pay assessments. Communicate frequently to owners when their assessments are due and why they are necessary, said Katherine Susmilch, owner of Winston Management Group in Elmhurst.

\”Not everyone understands that lack of funds is directly correlated to the inability to increase the amount of landscaping on the property,\” she said.

Association attorney Dawn Moody of Keough & Moody PC in Naperville, Illinois advises boards to adopt a collection resolution that details the association\’s policies and procedures.

The resolution should include information about when assessments are due, when late fees are applied and how much, and the legal consequences of nonpayment, she said.

\”The resolution also protects the board if you go to court,\” she said. \”When an owner complains to a judge, you can show in black and white, this is our policy and this is how we handle these cases.\”

If owners are struggling financially, refer them to outside resources such as real estate agents who specialize in short sales, housing agencies and credit counselors, said Susmilch.

Owners who don\’t follow the rules. Review your rules to make sure they are sensible and reasonable, include a section on fines and penalties, and periodically distribute them to the owners, said Susmilch.

\”Newsletters are a great tool for giving friendly reminders,\” said Moody. \”You can say something like, \’It\’s January, time for your holiday lights to come down.\’\”

Owners who feel they belong to a community are more likely to pay their dues, abide by rules, attend meetings and volunteer for tasks than those who view the association as a remote entity, she said.

Events and activities such as yard sales, movie nights and barbecues can help build cohesiveness, she said.

\”When people have pride in their community, they want to do the right thing,\” she said.

Board members who aren\’t watching the finances. It\’s not enough to elect a treasurer; every board member is responsible for every action of the board, said certified public accountant Kimberly Waite of Frost Ruttenberg & Rothblatt PC in Deerfield.

Set up controls to reduce opportunities for fraud and negligence, she said.

Her recommendations: Keep bank signatures current. Require invoices and receipts before making payment of bills. No credit or debit cards. Segregate financial tasks.

\”The person who writes the check shouldn\’t be the person who signs it,\” she said. \”If you\’re the treasurer, you don\’t want to be the only one on the hook.\”

Nonboard owners can ask tough questions, request records, lobby for a financial audit and run for the board at the next election. Some governing documents offer guidance for removing board members.

Property managers who don\’t perform. Review the management contract, which should spell out the manager\’s duties. If you have complaints such as the manager not generating specific reports or touring the property often enough, make sure these tasks were in the contract to begin with.

\”If there is something special that the board wants the manager to do, include it in the contract,\” said Susmilch. \”We cannot carry out your orders if you don\’t give them to us.\”

If the manager violates the contract, try to talk out the differences in a nonconfrontational manner. If that doesn\’t bring about changes, go to the head of the company the manager works for.

\”You can request a manager change,\” said Moody. \”Don\’t give up on the management company as a whole if someone else can serve your needs better.\”

Source:  Chicago Tribune

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